The Government stopped intervening and financial dollars skyrocketed

Today the government stepped aside in the bond market and let financial prices soar close to $30. After having allocated more than US$600 million to contain the MEP and cash with liquidation (CCL) since last April 25 -a decision that was put under the microscope at a time when the Central Bank (BCRA) entered the territory of negative net reserves-, within Economy they slipped that the objective of this strategy was to put an end to certain “speculative maneuvers” that had been detected in the exchange market.

He mep dollar It gained popularity with the arrival of the exchange rate, since it became a legal tool for Argentines to become dollars despite the exchange rate. It consists of the purchase of a bond in pesos, for its subsequent sale in dollars. If the operation is carried out with AL30, one of the markets where the Executive was actively involved, today the price jumped from $448 to $474.43, a daily advance of $26.43 (+5.6%). On the other hand, if GD30 bonds were operated, it appeared on the screens at $473.5. It was a climb to $29.50 (+6.6%).

The same trend was replicated in cash with settlement, a tool used to transfer foreign currency to a bank account outside of Argentina. If the investor traded GD30 bonds, today the value closed at $479.51, an advance of $25 compared to the previous close (+5.1%). In this way, the price tried to match two prices that the Government did not intervene: the GD30 with cedears, which this Thursday rose $12 and traded at $495.82 (+2.5%); and with Ledes, where a “curl” had been detected, at $490.

“It is clear that to the extent that official interventions are removed from the market, we return to the usual dynamics: sovereign securities fall sharply and prices jump. Until yesterday, the MEP traded at $440, a highly intervened price. It was enough for the Government to run from the bond market for the value to settle at $470″, said Fernando Camusso, director of Rafaela Capital.

According to calculations by Personal Investment Portfolio (PPI), on Wednesday the traded volume of GD30 and AL30 on the local stock market was “surprisingly high.” The Government allocated US$73.2 million to contain financial contributions, well above the average of the last few wheels.

In the accumulated of the last weeks, the public sector awarded a total of US$627.4 million since April 25. That day, the blue was close to touching $500 and Sergio Massa, the Minister of Economy, announced that they would use “all the tools of the State” to stop the currency run that had been caused after the bad inflation data in March.

“It seems that today the Central Bank stopped intervening. Or, at least, he stopped doing it the way he had been doing it. Everything points to the fact that today they did not come out to support the prices of the bonds in dollars, which is implicitly a trigger for the financiers. With this strategy, the monetary entity had been getting rid of dollarsa suspicion that was confirmed when the BCRA balance sheet was known, ”financial analyst Salvador Vitelli said earlier.

From the Ministry of Economy they admitted it and argued that, by not intervening, they sought “put an end to certain speculative operations and financial curls”. However, economists have also been pointing out that these strategies did not allow the Central Bank to earn foreign currency, even though the Export Increase Program (PIE) is operating.

“Despite the better results in the exchange market, international reserves continue to decline, mainly due to the interventions that the BCRA carries out in the bond market, where it has been buying an average of $98 million per day between May 5 and 12. In fact, the stock of international reserves decreased from US$45 million to US$33,298 million. So far in 2023, reserves have experienced a record drop of US$11.3 billion,” they said from Cohen Investment.

In the streets of the city Buenos Aires, today the blue dollar was negotiated at $488 the selling point. It was a rise of $1 compared to the previous round, while in the week it accumulates an advance of $13. Against the official wholesale exchange rate ($232.15)the exchange rate gap was above 111%.

This Thursday, the bond market was stained red in all its laws and maturities. But the strongest impacts were registered by those assets most used to operate the MEP dollar, where the Government carried out its interventions: the AL30 sank 5.48% and the GD30, 5.92%.

Besides, the S&P Merval operated at 331,210 units, an increase of 1%. In the main panel, the shares that stood out were those of Cablevisión Holding (+5.6%), Sociedad Comercial del Plata (+2.4%) and Edenor (+1.8%).

However, on the New York Stock Exchange, the Argentine shares traded there (ADRs) operated in negative territory. The papers of BBVA fell 4%, followed by edenor (-3,7%), Southern Gas Transporter (-3,4%) y Central Puerto (-3,2%).

“Domestic assets this time fail to take advantage of the foreign surge. There is still a long and winding road ahead in this election year, while the internal and external tugs in the coalitions reduce the chances of collaboration during this transition stage to manage the serious accumulated economic imbalances”, considered Gustavo Ber, economist at Estudio Ber.